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Fed Stays the Course

Posted by Joseph Trevisani on Mar 20, 2013 2:13:00 PM

 

The Federal Reserve kept its "highly accommodative" monetary unchanged today and said it will maintain its $85 billon a month in securities and Treasuries purchases. The Fed Funds target rate will stay at 0.0%-0.25% where it has been for more than four years. Both decision were expected and had little impact in the equity, credit or currency markets.

The central bank did improve its forecast for the unemployment rate positing that it will range between 6.7% and 7.0% in the fourth quarter of 2014 and 6.0% to 6.5% in 2015.

Chairman Ben Bernanke has said the bank will maintain its current policy until unemployment reaches 6.5% which will not occur until 2015 according to the bank's current estimates.  The Fed instituted an unemployment guideline for policy changes, the first in its history, at last December’s meeting. The unemployment rate was 7.7% in in February the lowest since the recession ended.

Inflation will remain at or below the official Feed guideline of 2.0% through 2015, with 1.5% to 2.0% forecast for 2014 and 1.7% to 2.0% for 2015.

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets

 

Charts: Bloomberg

FF targey resized 600

FF Effective resized 600

Fed Balance resized 600

 

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